August Watchlist Update
Below is an update on my watchlist for August in preparation of my Birthday Buys in January! I am targeting to add 1 to 2 positions in each portfolio. Some of the great July Ideas recommendations have made their way onto my watchlist πŸ‘€
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Taxable
Removed:
$COST - I have a number of other very strong alternatives that I would add ahead of Costco, so I removed it from my watchlist.
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Added:
$DE - Jumped to a 5/6 to tie $DMLP as an Industrials option.
$F - Potentially breaking one of my rules by choosing not to invest in auto manufacturers. This was a July Ideas rec, and ranks as a 5/6 to tie $DMLP as an Industrials option.
$CAT - Jumped to a 5/6 to tie $DMLP as an Industrials option.
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Roth IRA
Removed:
$WM - Dropped from a 5/6 to a 4.5/6 over the course of July. Added $AY, which has a higher ranking at 5/6.
$ALL - Dropped from a 5/6 to 4.5/6 over the course of July. Still have $OZK as strongest potential Financials picks ranking at 5.5/6.
$AFL - $OZK increased from a 5/6 to a 5.5/6, which is now my strongest potential financials play. $AFL has therefore been removed.
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Added:
$RICK - July Ideas rec. Ranking at a 5/6 and strong Sin Stock option.
$AY - July Ideas rec. Ranking 5/6 as a Utilities option.
$CAH - Jumped up to a 5/6 in July to tie $AMGN as a top Healthcare option.
$REGN - umped up to a 5/6 in July to tie $AMGN as a top Healthcare option.
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​My predicted picks in July were $PENN in my Taxable account and $AMGN in my Roth IRA. Now in August, my picks have changed to $CAT in my Taxable and $OZK in my Roth IRA.
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I'd love to hear your thoughts on my picks and thought process!
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Watchlist - Birthday Buys for 2023
Each year I make Birthday Buys as a way to slowly diversify. With about half a year to go, I decided to update my Watchlist on Commonstock to reflect the companies I am tracking for this upcoming January.
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I have a long Watchlist in each portfolio that I rank using the same Scorecard methodology as my active portfolios. This helps me make educated decisions on which positions to add. I use a combination of the Scorecard score, portfolio sector/industry weighting, and existing underperforming holdings in specific sectors/industries.
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Below is my current Watchlist and a breakdown on each:
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Taxable
I have exposure to all of my target sectors, so future additions are to continually improve portfolio and add great companies.
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$DMLP - This is the highest ranked company in my Watchlist at a 5/6. It has outperformed the S&P over the past 3 years, has a P/E under 25, Dividend Yield in the top 5% of my current portfolio, and I am underweight in Industrials. One concern is that the current dividend is more than 100% of their FCF. I need to do more research on this company in the next few months to understand it better.
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$PENN - I have tracked $PENN for a long time. I am a huge fan of Barstool, which introduced me to the company. Additionally, with the expansion of legalized gaming in the US, I think there is a long runway for this company. $PENN has had a sharp sell off and is at a much more palatable valuation. My current "Sin Stocks" are $CRON and $BUD, which have been less than underwhelming. Therefore, I am looking to add a stronger position to this sector. $PENN scores a 4.5/5 on my Scorecard - has outperformed the market over the past 3 years, but has underperformed recently. Has positive FCF, but no dividend. Has a P/E less than 25, and is an underweight industry in my portfolio.
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$COST - $COST is a strong, defensive play. I currently hold $TGT in the Retail sector of my portfolio. $COST currently has a higher ranking in my Scorecard than $TGT with a 3.5 vs 3. This would be an opportunity to incrementally improve. $COST has outperformed the S&P over the past 3 years, has a dividend payout less than 50% of FCF, and is a company and business I believe in.
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Roth IRA
I am continuing to build a balanced portfolio and initiate positions in unrepresented sectors - Consumer Discretionary, Defense, Financials, Healthcare, Sin Stocks and Utilities.
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$AMGN - Highest ranked Healthcare company in my Watchlist with a 5.5/6. $AMGN has outperformed the market, has a dividend payout less than 50% of FCF, dividend yield in the top 5% of my current portfolio, and has a P/E under 25. The only thing holding $AMGN back from a perfect score is I have only given it a Medium conviction rating. I will continue to research this company and potentially bump my conviction to High prior to January.
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$LMT - Highest ranked Defense company in my Watchlist with a 5.5/6. $LMT has a dividend payout less than 50% of FCF, has a dividend yield in the top 5% of my current portfolio, has a P/E less than 25, and I have High conviction in this company. The only thing preventing $LMT from a 6/6 is underperforming the market in the last year.
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$AFL - Tied for highest ranked Financials company with a 5/6. $AFL has a dividend to FCF ratio of less than 50%, has a dividend yield in the top 5% of my existing portfolio, and has a P/E less than 25. I will need to continue to research and compare to the other Financials companies in the watchlist to differentiate the companies further.
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$ALL - Tied for highest ranked Financials company with a 5/6. $ALL has a dividend to FCF ratio of less than 50%, has a dividend yield in the top 5% of my existing portfolio, and has a P/E less than 25. I will need to continue to research and compare to the other Financials companies in the watchlist to differentiate the companies further.
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$OZK - Tied for highest ranked Financials company with a 5/6. $OZK has a dividend to FCF ratio of less than 50%, has a dividend yield in the top 5% of my existing portfolio, and has a P/E less than 25. I will need to continue to research and compare to the other Financials companies in the watchlist to differentiate the companies further.
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$WM - Highest ranked Utilities company in my Watchlist with a 5/6. $WM has outperformed the market, has a dividend to FCF less than 50%, has a dividend yield in the top 5% of my portfolio. P/E is currently a little high at 34.
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If I were to make a gut decision right now, I would be adding $PENN in my Taxable account and $AMGN in my Roth IRA.
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Would love to hear from anybody who currently holds any of these companies or has read/written any research on them.
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Other alternatives in these industries are welcome as well!
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Where would I be able to read more about your scorecard process? I have been trying to develop one myself to make sure that I really know what I'm buying and am sticking to my strategies (and not, as I call it, buying the new shiny object in front of me).

As for the specific companies, I am a huge $PENN bull for the reasons you laid out, and my background is in the waste industry. While you can't go wrong with $WM, I'd encourage you to look at $WCN as well, as they are some of the best operators in the space, and have a little more room for growth, as they are not treated as one of the big dogs, despite their size. I personally have made my bet with $GFL, but I'm comfortable with less dividend right now and more volatility, because I think they will be able to keep making acquisitions to get to the size of the other big 3 over the next few years.
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